Opening/Closing/Holiday Bell: 04.10.09

Posted by William Richards, Apr 10, 2009, 11:00am

Re: the optimized site. We removed auto detection of mobile devices (which was taking those of you viewing on a Blackberry or iPhone directly to the new version and not letting you go to the regular one), so if you want to view standard DB on your iPhone, going to www.dealbreaker.com will still take you there. If you'd like to view the optimized site, which looks better (loads easier, etc) on the Blackberry, go to http://m.dealbreaker.com/.

Goldman To Raise Capital Through Offering (WSJ)
You have to wonder if this is the Treas pulling something of a loan shark move, intent on getting the whole vig and not permitting early repayment. Or on the flip side, it could be a legitimate concern for the banks and having to come back with another bailout.

"The move, which could be announced as early as next week, comes as the firm prepares to report solid first-quarter earnings Tuesday. Goldman executives haven't determined the exact size of the offering, but it is expected to be at least several billion dollars, these people say. They caution a final decision isn't made, and will be based partly on market conditions.

In October, the Treasury Department forced the nation's largest banks, including those that didn't need additional capital, to take government funds. Goldman received $10 billion. The view was that infusing all banks with capital would help shore up the financial sector more quickly and avoid tarring some banks as weak"

An Ideological Perspective On Short Selling (FR)
Discuss:

"The tendency to demonize short sellers is part and parcel of a larger sickness in the market: the "ever up" philosophy that is linked at the hip with the misnomer that the retail investor is, de facto, entitled by right to 8% returns year after year. Notice, also, that no one seems in a hurry to ban the unpatriotic and evil "put option." This, of course, is merely a matter of practicality, as the complexities of short selling and the specter of borrowing shares to accomplish it lends itself to criticism and anti-insider class warfare. Naked short selling is, of course, an issue, but not one that is even remotely managed by wholesale bans on the practice of short-selling."

Barclays Dumps iShares, Picks Up $4.4B (NYT)
This looks more like an AIG spin-off (read: act of desperation) than a rational decision.

"The iShares business, based in San Francisco, has long been a jewel in the crown of Barclays Global Investors, the company's asset management unit. The bank is financing the sale with a loan of about $3.1 billion and getting about $1 billion of equity in return. It is also banking on about $500 million in profit from the future earnings of the business, "if certain performance-related hurdles are met."

It said it expected a net gain of about £1.5 billion, or $2.2 billion, which would lift its Tier 1 capital ratio, a measure of financial strength, to 7.2 percent, adding 0.54 percentage to the end-2008 level had the sale been applied last year. It will be required to book only a small fraction of the loans against its reserves.

Is Greed Overcoming Fear In The Stock Market? (Reuters)
Yes.

Reinforcements Sent To Pirates! (Bloomberg)
"Somali pirates are sending help to gang members who are holding a U.S. ship captain hostage, while the European Union increased air patrols over the Indian Ocean to counteract a recent spate of piracy attacks.

A U.S. destroyer is continuing to watch over the pirates, who had briefly hijacked the U.S.-flagged Maersk Alabama about 250 miles off the Somali coast."

Why Dylan Ratigan Left CNBC (Clusterstock)
"A lot of things came together. One, it became apparent to me that there had been some major policy failures in America. While clearly pursuable at a place like CNBC, in my opinion, they are more broadly pursuable from a wide variety of other news platforms."

Chrysler In Debate Over Debt (WSJ)
There's ongoing talks between Chrysler, the failing company, and the Treasury, the people who give said companies endless amounts of cash. See, the idea here is to protect the debt holders at all costs, even though Chrysler is effectively dead in the water. I can respect that on a certain level; I've always been a fan of investments being insured, and if anyone's going to do it without bias I think the Treasury's our girl.

"Talks between the U.S. Treasury and Chrysler LLC's bank lenders have hit a standstill as they debate a multibillion-dollar gap over what the car maker would be worth should it be liquidated in bankruptcy.

Some senior lenders believe they would get more than 70 cents for each dollar of their secured loans if Chrysler is broken up and sold, said people familiar with the talks. Other lenders don't have an exact number nailed down and are awaiting detailed figures from the auto maker on its assets.

All of the 40-plus lenders and investors are nonetheless incensed by the last Treasury offer: that they accept about 15 cents per dollar of face value of their loans, or roughly $1 billion of the $6.9 billion owed them."

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